Ordinarily, if a mortgage foreclosure action is dismissed, even if it is “with prejudice”, it will not prevent the lender from filing a subsequent foreclosure action based upon the same mortgage if there is a another default by the borrower. This principle was re-affirmed in the recent case of Star Funding Solutions, LLC v. Krondes, November 21, 2012, (Fla. 4th DCA). However, if the action is dismissed because the underlying mortgage itself is determined to be unenforceable (e.g., the applicable statute of limitations has run), the dismissal with prejudice will act as a bar to a subsequent action.
This principle can be applied to a mortgage foreclosure action that is dismissed or where judgment is entered in favor of a borrower because the lender did not have standing to bring the action (usually due to a lack of proof that the lender was the holder or owner of the note or it had not received an assignment of the underlying mortgage before the action was filed). Such dismissal or judgment will not prevent the lender who does have standing from filing a new foreclosure of the same mortgage. In essence, the lack of standing defense, even when it is successful, only results in the delay of the foreclosure (which to many borrowers, however, is the relief they are seeking). A borrower may also be entitled to recover attorney’s fees and costs from the lender in the dismissed action.
Update: In 2016, the Florida Supreme Court re-affirmed the principle that a lender may re-file a dismissed mortgage foreclosure action if there is a subsequent borrower default, although a question remains whether the “deceleration” clause contained in the standard mortgage at issue was material to the Court’s holding. See Bartram v. U.S. Bank, SC 14-1266 (Fla. November 3, 2016).
